I have a Roth IRA, but recently my wife and I reached annual income that makes contributions not permitted anymore. We both have 401ks at our work - Does the same rule apply to a Roth 401k?
If we both contribute the maximum to 401k (from my understanding the maximum is 18K each - so 36k?) If hypothetically subtracting 36K from our annual income means we are below the limit for Roth IRA contributions, does that mean we can then invest the $5500 each?
Does the same rule apply to a Roth 401k?
No - there is no income limit to participate in a Roth 401(k)
If hypothetically subtracting 36K from our annual income means we are below the limit for Roth IRA contributions, does that mean we can then invest the $5500 each?
If the 401(k) is a traditional 401(k) and not a Roth 401(k) then yes, but you'll need to talk to a tax advisor with your specific information to be certain. A Roth 401(k) contribution is after-tax will not change your AGI.
You might also be able to do a back-door Roth contribution by transferring part or all of a traditional IRA to a Roth IRA. Again talk with a tax pro to make sure you execute the conversion correctly.
As D Stanley correctly stated, no, the income limit doesn't touch the 401(k), Roth or traditional. And, no, the Roth 401(k) deposit doesn't lower your income, and doesn't impact AGI. The traditional IRA deposit/conversion is the way to go.
All that said, I'd ask why you are loading Roth and not using this opportunity for pre-tax deposits? The ideal mix at retirement isn't 100% Roth, nor 100% pre-tax, but the mix that optimizes your lifetime tax bill. Depositing enough money that would have been taxed at 25% or higher, to withdraw it at retirement at 0/10/15 is the optimum mix.